NSV Netservices

RNS Number:7649D
NetServices PLC
13 September 2007



FOR IMMEDIATE RELEASE                                          13 September 2007

                                NETSERVICES PLC
                                        
                            Pre-Close Trading Update


NetServices plc (AIM:NSV) (the "Company") wishes to take this opportunity to 
provide an update on trading for the financial year just ended before it enters 
a close period.

Un-audited Results for the year ended 31 August 2007

The results for the year to 31 August 2007 are expected to be turnover of not
less than #12.6m (2006: #16.2m) which will lead to an EBITDA loss of
approximately  #0.3m, resulting in an expected loss before tax of #1.1m, in line
with  management's expectations.

In May 2007 the Company announced the sale of its wholesale consumer broadband 
base to 186k Limited ("186k"). The purchase consideration payable by 186k was 
#0.8m and the profit on this transaction which will be recognised in the
financial  year ended 31 August 2007 is expected to be not less than #0.4m.  We
have been  pleased with the efficient and effective way in which 186k has taken
over the  servicing of the resellers covered by this disposal. We are in the
final stages  of migrating the technical infrastructure required to deliver
these services to  186k. In the meantime, we have been re-charging costs
incurred on behalf of  186k to 186k.  At the year end, approximately #0.4m of
the cash held by us, represented payment by 186k for these supplier recharges.

Ongoing business activities, primarily our converged voice and data business, 
targeted at mid sized corporates and strategic resellers, contributed 
approximately #7.5m of turnover.  Importantly, this is an area which produces
higher  margins, and in the second half of this year achieved gross margins in
excess of  40%. This business is expected to generate an EBITDA loss of
approximately #0.3m, and an expected loss before tax of #1.0m, after charging
#0.7m of depreciation  and interest. Significant progress has been made in the
Company since the half year in rationalising and reducing the direct costs of
sale and overheads, and these ongoing business activities are currently EBITDA
positive.

During the financial year ended 31 August 2007 the Company chose to exit from 
two areas of business where it possessed neither the scale nor the resources to 
compete and generate a satisfactory rate of return.  These were the wholesale 
consumer broadband business referred to above and Carrier Pre Select ("CPS")
over  traditional PSTN technology.  This part of the business contributed
approximately  #5.1m of turnover but due to continuing bad debt risk and write
offs it is expected  that it will have contributed approximately #0.5m of the
loss before  tax in the year.

Notwithstanding the impact of the bad debt charges referred to above, the
Company  has made good progress in the collection of its overdue receivables
during the year. In addition, we have been aggressive in pursuing non-payers,
and at the year end  there were a number of claims being pursued, where,
although we have fully provided  against the debt, we would hope to make some
recovery.

As at 31 August 2007, the Company had cash balances of #1.9m, including the
#0.4m  to above (2006: #1.4m).


Board Changes

As announced at the time of the interim results Steven Hartley stepped down as 
Finance Director to become a Non-Executive Director. Ian Winn became the new 
Finance Director on 1 July 2007.


Outlook

Our strategy remains focused on developing business in complex higher margin 
converged solutions. Our core infrastructure, our comprehensive product
portfolio  and the in-house expertise gained through managing voice networks
means we believe  we are ideally positioned to provide the 'value-add' in
converged networking  required by direct businesses and the PBX and value added
communities of resellers.  We have made progress with the recent launch of our
Quality of Service (QoS)  IPStream product which has received much interest and
the continued development of  our IP (Internet Protocol) Carrier proposition to
resellers.  In particular this  has enabled us to sign a three year, #1.5m
contract with a large professional  services firm for the delivery of a
converged network, incorporating both voice and  data requirements.

We will provide a further update on trading and progress at the time of the
publication of the Company's preliminary results in November.


                                    - Ends -




For further information, please contact:

NetServices plc                  Today on Tel No: 020 7466 5000
Mark Vickers, Chief Executive
Ian Winn, Finance Director

Arbuthnot Securities             Tel No: 020 7012 2000
Tom Griffiths

Buchanan Communications          Tel No: 020 7466 5000
Lisa Baderoon




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